Michael Grade, the BBC chairman, has pledged that ITV will make the best British television shows with tangible improvements delivered by the second half of next year.

His appointment as ITV's executive chairman has been welcomed by shareholders and advertisers who are confident he will deliver higher audience figures next year once he takes over ITV in January.

Explaining his priorities for the company, Mr Grade said: "Its strengths need to be in originated British productions for British audiences of all genres.

"That's what the new folks on the block, who are providing terrific competition, don't do. It's the core business of the BBC, Channel 4, five and of ITV. What separates us from new channels is the level of investment in British production."

He also promised ITV that he would put the commercial broadcaster back on the offensive. "It is not a matter of saying what the BBC is not doing well – you can either be defensive in your attitude, which is keep looking at what everyone else is doing and respond, or get on the front foot and let everyone else worry about what we're doing and get them worrying about us for a change."

He promised that shareholders and advertisers would be able to see an improvement in the performance of the business next year.

"I would expect to see my influence being felt in the second half of 2007," said Mr Grade. The company's shares initially rose after confirmation of his appointment, climbing 1.7pc to 114½p. However, by the end of trading the price had fallen back to 110¾p.

Mr Grade will be paid £825,000 a year plus a performance-related bonus. He will also be awarded ITV shares under a long-term incentive plan.

This award will be based on the performance of ITV over five years and equivalent to 150pc of his current annual salary over five years.

His appointment was also welcomed by Sir Richard Branson, the 11pc shareholder in NTL which saw its recent bid for ITV rejected.

"We very much hope that today's news signals a better creative future for commercial terrestrial television in the UK and I look forward to meeting him in the New Year," said Sir Richard.